Entering the 1 billion club in 4 years, Fang Li’s transformation of TikTok

Domestic beauty brand Fangli achieved a sales leap through the Douyin platform, with sales exceeding 1 billion in 4 years, becoming a dark horse in the industry. Fangli used Douyin's marketing strategy, focused on the research and development and innovation of base makeup products, and successfully achieved rapid brand growth on the Douyin platform by accurately targeting young consumer groups and cooperating with beauty influencers.

For many domestic beauty brands, this may be a difficult and confusing period.

Since 2023, many domestic emerging beauty brands have "fallen".

In January last year, the cosmetics brand It's Focus announced the closure of its stores, just three years after its establishment. In the following months, many domestic cosmetics brands such as Colorpedia, Happimess, and Fomomy successively announced store closures or clearance notices.

At the end of June this year, the cosmetics brand VNK announced the closure of its Tmall flagship store, and other online channels (such as WeChat official accounts, WeChat mini-programs, and Douyin platform) have also stopped updating content or removed products.

The chill comes not only from the fallen brands, but also from the investment market.

According to incomplete statistics from the beauty industry media "Jumei", there were only 51 global beauty industry investment and financing events in the first half of 2024, compared with 81 in the first half of 2023, a year-on-year decline of 38.27%.

Among them, there were 33 domestic investment and financing events and 18 foreign investment and financing events. From a monthly perspective, the number of investment and financing events has gradually decreased, and the market has gradually cooled down.

However, among all the bad news, Kas also noticed some dark horse brands that emerged during the downturn, which are still growing rapidly and gaining favor from capital.

Attracting users by operating online e-commerce platforms is a common choice for brands. Fragrance brands Guanxia and Wenxian focus on Tmall, lip care brand Cirque du Soleil focuses on Xiaohongshu, and makeup brand FUNNY ELVES focuses on Douyin.

These dark horses all have highlights that are worth paying attention to. Today, Kas would like to talk about Fang Li first.

This is a cosmetics brand that was founded in 2017. Its sales exceeded 200 million in 2021, and its total sales in 2023 exceeded 1 billion. During the 618 period this year, it ranked among the top 3 in Douyin's e-commerce cosmetics track, with sales of nearly 100 million. There was no cliff-like decline after the big promotion. The estimated sales in the past 30 days are 75 million to 100 million yuan.

How did Fang Li rise successfully on Douyin? Is its Douyin business methodology worth copying by other brands?

01 After 4 years of rapid development, it has entered the 1 billion club with foundation

Fangli was born in a period when new domestic brands were emerging rapidly. In the first three years of its establishment, it was still a little-known small brand.

In 2017, new online traffic platforms gradually grew stronger, and the resulting huge wealth began to pour into emerging domestic beauty brands.

Brands such as Huaxizi, Fangli, Juduo, and Perfect Diary were all born this year. What they have in common is that they understand users and traffic, and do not rely on offline channels. They can grow rapidly and gain capital support solely through online e-commerce platforms and social media platforms.

The background of Fangli's founding team makes them more familiar with online traffic operations. According to Kas, Fangli's founder and CEO Yang Ju has been engaged in the imported cosmetics supply chain industry for 10 years. She founded Yuezhimi (Beijing) Biotechnology Co., Ltd. and Hangzhou's well-known MCN agency "Meixi", and operated Hangzhou Dama Supply Chain Co., Ltd. to develop innovative beauty products with more internationally leading technologies for customers.

Chief Marketing Officer Tao Zi was once a core member of Xiaohongshu's e-commerce and has more than 10 years of experience in market management and beauty brand merchant operations.

In 2020, Yang Ju observed that financing in the beauty industry tended to be "calm", but the foundation track was still in a stage of rapid growth.

Therefore, in May 2020, Fang Li officially started to pursue the foundation route, and successively launched two series of star products, photosensitive setting powder and long-lasting liquid foundation. Both product lines have multiple color numbers to suit different skin tones, and anti-oxidation and anti-makeup removal are their biggest features.

In the increasingly competitive beauty market, product innovation is still seen as the underlying driving force for growth. Beauty brands born under the halo of new consumption have worked hard on R&D and tried to tell more stories. Fangli is no exception. The high investment in R&D is a competitive barrier that it has always emphasized.

Public information shows that Fang Li selected high-quality raw materials from six countries including the United States and Japan, carried out secondary processing on the raw materials, and made adjustments to the production process.

By investigating and analyzing users' skin types, skin care habits, geographic locations and other information, the brand has built a real skin type database and has published the "Asian Skin Type White Paper" to analyze the differences in foundation needs between Eurasian populations.

In 2022, the brand reached a cooperation with Harvey Gedeon (former Chief Technology Officer of Estee Lauder Group) to establish Fangli Bionics Laboratory, focusing on the research of base makeup products. At the same time, the brand also has its own R&D laboratory and international supply chain, and the formulators are all from international first-line R&D institutions.

In 2023, Fang Li acquired the New York Foundation Makeup Laboratory in the United States and reached a strategic R&D cooperation with Winona's parent company, Beitanni Group.

In terms of channels, Fangli's online sales channels are concentrated in Tmall flagship store, Douyin, and distribution channels, and it has done content operations on Xiaohongshu. Offline, it has more than 1,000 sales points, and there will be about 3,000 domestic offline sales points in 2023. It is still accelerating the expansion of offline channels and overseas channels. According to 36Kr, in 2021, Fangli's online sales exceeded 200 million yuan, and its revenue increased by 1,300% year-on-year;

According to the beauty industry media "Yimeishang", in 2023, Fangli's total sales exceeded 1.2 billion, and Douyin e-commerce contributed 480 million yuan, with a year-on-year growth rate of more than 200%, making it one of the fastest growing brands in the Douyin cosmetics field.

Screenshot of @Funny Elves official flagship store's Douyin livestream

In terms of financing, Fangli obtained angel round financing in 2018; in June 2022, Fangli completed tens of millions of yuan in Series A financing, led by Beitanni Group and followed by Qingrui Venture Capital. The funds were mainly used for product upgrades, offline channel construction and team expansion;

Thanks to its rapidly growing performance, in April 2024, Fangli completed its A+ round of financing. Institutions participating in the investment included Jinshajiang Venture Capital, and the amount of financing was not disclosed.

02 To be ranked in the top 3 of Douyin’s makeup market, Fang Li did 4 things right

At the beginning, Fang Li started on Tmall. Later, when the brand entered the growth stage and needed to quickly acquire incremental users, its marketing focus was placed on Douyin.

According to third-party data, from January to June this year, Fangli's estimated sales on Douyin were 286.75 million to 600.75 million. During the 618 promotion, its sales reached nearly 100 million, successfully ranking in the top 3 of Douyin's cosmetics market, second only to Huaxizi and YSL. Compared with more well-known international brands and senior domestic brands, what did the little-known Fangli do right? Kas summarized 4 key words.

The first keyword is "small".

Unlike lipstick, users are more loyal to base makeup (liquid foundation, powder cream, pressed powder, etc.), so the threshold for starting a base makeup business is higher. The first step is to solve the user's desire to try new things.

Taking the popular powder as an example, Fangli chose to make the product specifications "small", from 12g to 7g, and then lower the price. The average customer unit price is 87 yuan, while mature brands are mostly above 150 yuan. This reduces the decision-making cost of first-time buyers and is more friendly to price-sensitive people.

Image source: Fangli Douyin flagship store

The second keyword is "crowd".

If a brand wants to operate in the Douyin e-commerce market for a long time, it must have a crowd-based mindset, especially in the competitive red ocean, it must find the brand’s target audience.

Fangli’s approach is to first attract and capture the new makeup crowd aged 18-23, which once accounted for more than 50% of its consumers.

Fang Li's choice belongs to "misaligned competition". Most people who are new to makeup are beginners and have not yet established brand loyalty. "Low price + small size" can easily stimulate their desire to place orders, and avoid fierce competition with mature brands such as Huaxizi and Mao Geping. Data shows that users aged 24-40 account for more than 80% of Huaxizi's live broadcast room.

The third keyword is “KOL”.

The popularity of cosmetics is inseparable from influencers, and Fangli has also formulated a differentiated strategy for influencer recommendation, that is, it does not blindly believe in the number of influencers' fans, but prefers influencers in the beauty and makeup vertical and general vertical categories. Whether it is recommendation or product promotion, a large number of mid- and low-level influencers are selected. From January to July this year, the proportion of influencer promotion in Fangli's total sales reached 2/3.

Li Hao, founder of Kas Consulting, believes that based on Douyin’s traffic promotion mechanism, there is also a strong Matthew effect when influencers bring products. Therefore, when cooperating with influencers, especially mid- and low-level influencers, we should not only focus on their sales data, but instead pay more and more attention to the content power/grass-planting power.

Fang Li has collaborated with a large number of influencers on Douyin

The fourth keyword is “breaking the circle”.

If the differentiated crowd strategy is an important reason why Fangli can break out of the foundation market, then the brand's high sales during the Douyin 618 promotion is inseparable from its integrated marketing plan.

At the end of April this year, Fang Li officially announced Maye Musk as its brand spokesperson. She is a supermodel, a doctor of nutrition, a best-selling author, a public speaker, and the mother of the world's richest man Musk.

In May, Fong Li launched a new product, the Special Care Liquid Foundation, claiming to create a "second skin" for Asian users with sensitive skin, and introduced the Asian foundation formula: F=A (skin type) + B (skin color) + C (skin condition) + X (scene).

Image source: Screenshot of Douyin video of Fangli founder Yang Ju

Afterwards, Fang Li conducted a lot of content marketing on Douyin to spread the brand concept widely. Through content that contained opinions and attitudes, she advocated that "women's true confidence lies in self-discovery", and at the same time linked Douyin's marketing resources and influencers to successfully break through the crowd circle.

The latest data shows that in Fangli’s user portrait on Douyin, the proportion of users aged 18-23 has dropped from more than 50% to 34.6%, and users aged 24-40 account for more than 50%, which is the basis for its sales leap during the 618 period.

03 Use the combination punch to replicate Fangli's takeoff path

Can other brands replicate Fangli’s path to achieve a breakthrough from 0 to 1 and then to 100?

Kas believes that it is feasible. Fangli’s Douyin marketing methodology can be summarized as a combination of "one selling point + vertical category detonation + multi-scenario planting + UGC co-creation". It is a "regular army" approach. Brands with budgets, marketing thinking, and efficient teams can completely replicate it.

In terms of product recommendation strategy, Fangli prefers vertical influencers, mainly in the categories of beauty and fashion, supplemented by general vertical influencers (including life, appearance, and good product recommendation).

The first launch matrix tends to use celebrities and top-level influencers, and then extends to mid-level and tail-level influencers and KOCs. Compared with the number of fans, it pays more attention to the content quality and fan stickiness of the influencers.

Data shows that from January to July this year, Fangli cooperated with 7,580 KOLs/KOCs, of which the beauty/fashion vertical accounted for 53.11%. In terms of the number of fans, influencers with less than 10,000 fans accounted for 65.63%, followed by influencers with 10,000-100,000 fans, accounting for 22.8%, and influencers with 100,000-1 million fans accounted for 8.73%.

In terms of sales volume, among the influencers who bring in more than 100,000 yuan in sales, the proportion of influencers with less than 10,000 fans has decreased from 65.63% to 40%, while the proportion of influencers with 100,000-1 million fans has increased from 8.73% to 23.2%.

Among the top 10 influencers with the highest sales volume, half of them have between 100,000 and 1 million followers, and are mostly beauty influencers. According to statistics, from January to July this year, the influencers who brought the most sales to Fangli were @金刚芭芭鱼, @欧气粥粥 (city version), and @Kiss杨可儿.

Image source: Kas Data

Looking at the "scenario", what brands need to think about is: "What kind of people, in what scenario, what problems they encounter, and what solutions they can provide", and create content along this line of thought.

In order to fully promote the core selling point of "long-lasting makeup", Fangli will ask influencers to combine specific scenarios, such as after sweating during exercise, crying, taking a bath, eating hot pot and other life environments to show the durability of makeup, or the fit of powder to set makeup, thereby strengthening the affirmation of its long-lasting makeup.

Screenshot of Fangli's Douyin influencer's video

Compared with mature players in Douyin's foundation track, brands such as Hua Xizi, Mao Geping, and Lianhuo, their main selling points are oil control and blemish concealer, while Fangli's main selling point is long-lasting makeup and soft focus, which has formed a certain distinction with mature brands in selling points and reduced the fierce fighting on the front battlefield.

The careful consideration in product design is an important reason why Fangli, as a new brand, can inspire UGC to spontaneously promote products.

Taking powder compacts as an example, many videos have the content of “ONE MORE FOR FREE”. This kind of content can not only stimulate the audience’s interest and spread the selling point, but also indirectly show the user the useful features of the product, otherwise there would be no need for the compact disc.

In short, judging from Fangli’s Douyin growth path, promoting products is still a top priority for brands.

The purpose of influencer distribution is not to sell goods, but to plant grass. Long-tail influencers cannot sell goods, and their GMV and profit margins are limited. The role of their videos is to "plant grass with content", helping brands increase A1 and A2 populations, and gradually transform them into A3 under the influence of a large amount of content. Finally, they take over the traffic through the brand live broadcast room and complete the closed loop of mowing the grass.